ESMA puts forward expectations towards effective circuit breaker implementation

Summary:

The European Securities and Markets Authority (ESMA) has published a supervisory briefing on circuit breakers, providing a comprehensive overview of supervisory expectations regarding the calibration of circuit breakers implemented by trading venues (TVs). The briefing outlines principles for national competent authorities (NCAs) to enforce, aiming to strengthen convergence among NCAs on circuit breaker calibration methodology, promote compliance, common understanding, and enforcement practices. This guidance comes in response to recent market volatility, including the May 2022 flash crash and Russia's military aggression against Ukraine, and is expected to improve the calibration of circuit breakers throughout the EU, better managing volatility.